InvestorQ : What are the changes that the government is proposing to the LLP rules in India?
Rutuja Nigam made post

What are the changes that the government is proposing to the LLP rules in India?

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9 months ago
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Here is a quick take on the changes proposed by the government on limited liability partnership or LLP rules in India.

· With the idea of boosting the “Ease of Doing Business”, Indian government is preparing to introduce a Bill in the monsoon session on LLPs.

· The idea of the Bill, among other things, will be to decriminalize technical violations in the Limited Liability Partnership Act, which governs registered LLPs in India.

· Under the new model that the government is working on, a total of 12 offences will be decriminalized and be dealt with by in-house adjudication mechanism rather than NCLT.

· Funding has been one of the major challenges for LLP due to the limited liability provision and the Bill will try to make borrowings easy for LLPs.

· The Bill will also offer relief to these businesses on certain fees and penalties for defaults, especially in the case of small LLPs to reduce the compliance burden.

· There is also a plan to introduce accounting and auditing regime for LLPs so that greater faith is built into such businesses for external partners

· However, this will also come with some higher degree of accountability as LLPs may be asked to be transparent about real beneficial owners and the Bill could also restrict number of LLPs in which you can be a designated partner.

All in all, these new rules should be positive for LLPs overall.

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